PayPal Holdings PYPL is putting artificial intelligence (AI) at the center of its latest reset. In the first quarter of 2026, the company said it expects at least $1.5 billion in gross run-rate savings over the next two to three years through simplification, fewer organizational layers and faster AI adoption.
CEO Enrique Lores framed the effort as more than cost-cutting. On the earnings call, he said PayPal needs to “become a technology company again,” modernize its platform and use AI to improve developer productivity and shorten time to market. The company also created an AI transformation and simplification team reporting directly to him.
Management said the savings will help fund growth areas rather than simply drop to the bottom line. PayPal is now organized around three business models: Checkout Solutions & PayPal, Consumer Financial Services & Venmo and Payment Services & Crypto. The company plans to reinvest savings in checkout, Venmo financial services, payment processing and platform modernization.
The timing is important because PayPal continues to invest even as margins face pressure. First-quarter 2026 revenues rose 7% to $8.35 billion, while non-GAAP operating income fell 5% to $1.54 billion. The non-GAAP operating margin contracted 229 basis points to 18.4% as the company increased spending on technology, product development and marketing.
The operating picture remains mixed. Total payment volume (TPV) grew 11% to $464 billion. However, branded checkout TPV increased only 2% on a currency-neutral basis, while the company’s full-year guidance still calls for non-GAAP EPS growth ranging from a low-single-digit decline to slightly positive.
How Are Intuit & Block Restructuring?
Intuit INTU announced in May 2026 that it would cut about 17% of its full-time workforce, affecting roughly 3,000 employees globally. The company said the restructuring is designed to simplify operations, eliminate overlapping functions and accelerate its AI-first strategy across products like TurboTax, Credit Karma and Mailchimp.
Block XYZ is pursuing one of the most aggressive efficiency overhauls in fintech. In February 2026, Block’s CEO, Jack Dorsey, announced plans to reduce more than 40% of the company’s workforce as part of an AI-driven restructuring. It said AI tools and automation would replace layers of operational work while improving speed and productivity.
PYPL’s Price Performance, Valuation & Estimates
Shares of PayPal have declined 4.5% in the past three months against the broader industry and the S&P 500 Index rise.
From a valuation standpoint, PayPal’s shares are trading cheaply, as suggested by the Value Score of A. In terms of forward 12-month P/E, PYPL stock is trading at 8.24X, which is at a significant discount to the Zacks Financial Transaction Services industry’s 18.17X.
PayPal’s estimate revisions reflect a positive trend. The Zacks Consensus Estimate for full-year 2026 EPS has been revised upward to $5.32 in the past month. The consensus estimate for the metric indicates a year-over-year increase of 0.19%.
PayPal currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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